China: investment in commercial real estate on the rise

China’s annual commercial real estate investment is expected to top 300 billion yuan ($47 billion) for the first time in 2022.

This shows that China’s economy is on the right track this year as countercyclical policies and structural transformation ensure steady growth, according to a report by CBRE, a commercial real estate and investment services firm.

Commercial real estate investment in China rebounded strongly last year, with total deal volume jumping 33 percent year-on-year to 273 billion yuan. The figure for the coming year is expected to rise between 10% and 15% to exceed 300 billion yuan due to strong market conditions, according to the CBRE report.

A CBRE survey of Chinese investor intentions found plans to buy have hit a new high, with 59% of respondents saying they intend to buy more in 2022.

The purchase intentions of domestic and foreign investors have strengthened compared to the previous survey. Interest from foreign buyers is particularly high, with Shanghai and Beijing ranking among the top five destinations for cross-border investment in the Asia-Pacific region.

“As the country transforms into a low-carbon economy with high value-added technology, the growth of investments in biomedical, electronics and telecommunications, integrated circuits, new energy vehicles and other high-tech manufacturing industries will accelerate,” said Xie Chen, head of research at CBRE China.

Xie suggested investors target real estate benefiting from the new economy such as logistics, warehouses, business parks and data centers, and seize cyclical opportunities in office and retail sectors. .

Emerging as one of the markets that rebounded strongly in 2021, China’s commercial real estate sector saw its transaction volume reach $39 billion, up 21% year-on-year, according to a report by JLL, a global real estate and investment service. management company.

By category, investment in offices took the lion’s share of the commercial real estate market, accounting for 37% of total transaction volume. Logistics transactions increased significantly to 38 billion yuan in 2020 from 16.9 billion yuan in 2019, and jumped to 59.1 billion yuan in 2021. Large-scale wallet transactions boosted investment in retail and alternative transactions hit an all-time high, the report adds.

In terms of destination, Shanghai remained the most popular among Chinese cities, attracting over 40% of total investment. Beijing has also proven to be a preferred destination for investors due to its low supply of assets in central areas.

The past year has been significant for investors as China launched real estate investment trusts, which boosted market liquidity and transparency. Pilot REITs have exceeded expectations from the start, JLL said.

China launched sales of its first batch of nine publicly listed REITs on May 31, representing a big leap forward for the country’s asset management industry, Xinhua News Agency reported.

The nine REITs are expected to channel investments into infrastructure projects, including highways, industrial parks, storage and logistics facilities, and wastewater treatment.

Rental housing is another sector that has attracted investor interest in 2021, with many government policies and initiatives promoting the sector, according to the JLL report.

“Influenced by the structural deleveraging of the Chinese market over the past year, property developers have been selling assets in exchange for cash. Investors took advantage of this unique opportunity to acquire assets. Buyers buying homes for their own use have also expanded their asset portfolios based on their needs,” said Pang Shudong, head of capital markets at JLL China.

In 2022, with expected interest rate cuts and easing, more confidence will be injected into the real estate market, said Pang, who foresees even more active long-term investing.
Source: China Daily